Captive Brands Compete Big in Beauty

Excerpted from Brand Week “Retailers Rally Behind Their ‘Captive Brands'” by Elaine Wong, September 28, 2008

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Retailers have come a long way from the no frills aisle.Rather than marketing store brands as some lesser, cheaper alternative to brand name products, Wal-Mart, Walgreens, CVS and others are increasingly creating and promoting their own “captive brands”… 

Carrying no evidence of the store’s affiliation, these brands, manufactured by a third party and sold exclusively at the chains (hence “captive”), let the retailer command a price similar to brands produced by consumer packaged goods companies like P&G. They also let the retailers gain ground in a category—beauty—for which consumers generally take a dim view of traditional private label brands….

P&G has taken notice. “We treat them just like we do any other competition,” said P&G rep Dave McCracken. “We try to out-innovate anyone, whether it’s a captive or retailer brand or other competition.”…Competition among retailers is driving the captive brand movement, said Walgreens rep Tiffani Bruce. “It’s a way of differentiating. If there’s something we have that other retailers don’t have, it’s an opportunity for us to build loyalty.”
Walgreens created an internal “brand police” to regularly evaluate its product portfolio. “They protect the standard and quality for our brands so we know that we are competing side-by-side with national brands,” Bruce said. “We have limited shelf space so we try our best to pinpoint which brands are resonating well with customers and what needs are being met.”

One reason why the shift has affected beauty care more than other industries is because the category itself is “over-SKU-ed,” said Mike Moriarty…”If you look at the haircare aisle, it has way too much product in it anyway.”  The influx makes it particularly tempting for retailers to introduce their own offerings because they can identify certain niches not yet met by their consumer packaged partners, Moriarty said.Since the retailer ultimately controls the display units, the result is a shelf space war. That’s a circumstance in which captive brands have a distinct advantage…This, however, does not mean that captive beauty brands will eventually displace their branded rivals, CVS’ Pensa said.. 

Edit by SAC

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Full article:
http://www.brandweek.com/bw/content_display/news-and-features/packaged-goods/e3if624dc1ee34cd1b5f24e9d19408550b8?imw=Y

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